"Two conditions to achieve it" .. Al-Sudani's advisor rules out removing 3 zeros from the currency
The Prime Minister's financial advisor, Mazhar Mohammed Salih, ruled out the government removing three zeros from the Iraqi currency at present, noting that achieving this requires two basic conditions.
Saleh said in a statement reported by the Rudaw media network, and seen by Al-Eqtisad News, that he rules out the possibility of the government removing zeros at present, indicating that “removing three zeros from the currency has nothing to do with the value of the currency, but rather with improving cash payment systems.”
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He explained that "the three zeros added price and monetary inflation to the currency, starting with the Iran-Iraq war and passing through the time of the economic blockade (the nineties of the last century), and the conflicts generated inflation in the value of the currency."
He pointed out that "when prices rise, we need larger denominations of money to maintain the equivalence between price and money. For example, due to price inflation, 25 Iraqi dinars have become 25,000 dinars."
Saleh pointed out the importance of "reducing the calculations that have reached trillions in recent years, and this has become a tiring matter," adding that "the process of raising three zeros does not only mean the value of the currency, but also the calculations and statistics, and in order for the method of managing it to be easy."
The Prime Minister's financial advisor also said that "the process of issuing large denominations reduces the currency in terms of quantities, and is a process of reforming the cash payments system, especially since this modern and advanced time requires smaller numbers."
He believed that removing three zeros from the currency, globally, requires two conditions: "political stability and economic stability. When these two factors are available, countries resort to removing zeros from their currency," adding that "the value is fixed and not affected. Rather, it is a relative change."
He stated that the project to remove three zeros “we worked on between 2011 and 2012, but there was a delay in the matter, because it requires a change in the accounts of the Republic of Iraq and statistics, and requires cooperation between monetary policy and all government policies.”
It is noteworthy that a number of economists and experts recently called for deleting three zeros from the Iraqi currency, considering that this would reduce monetary inflation in Iraq and strengthen the dinar currency.
Rafidain announces the implementation of the comprehensive banking system in three new branches
Rafidain Bank announced, today, Thursday, the implementation of the comprehensive banking system in the branches of Al-Amel neighborhood in Baghdad, Al-Farouq in Diyala, and Al-Khalidiya in Anbar.
The media office of Rafidain Bank said in a statement received by "Al-Eqtisad News", "In implementation of the government program to move from paper transactions to electronic transactions to provide the best services to citizens, Rafidain Bank announces the implementation of the comprehensive banking system in the branches of Al-Amel neighborhood in Baghdad, Al-Farouq in Diyala, and Al-Khalidiya in Anbar to join the branches that have activated the comprehensive system in Baghdad and the governorates in addition to the branches of the border crossings (Zurbatiya - Safwan - Arar - Trebil) so that the number of branches that have implemented and completed the system becomes (40) branches," indicating that "this came in an important step to strengthen the banking system and achieve its requirements and leave paper work and move completely to electronic systems."
The two banks confirmed that "the digital transformation plan and the adoption of the comprehensive banking system are proceeding according to the set timetables to include all bank branches in the implementation of the system, especially since the priorities and adoptions of the government program include electronic transformation in financial transactions, reducing the circles of routine for citizens, shortening time, simplifying procedures, overcoming obstacles, and intensifying efforts to improve the level of services provided to customers and completing their transactions."
Industrial Bank warns citizens against carrying amounts exceeding the permitted limit
The Industrial Bank warned citizens, today, Thursday, against carrying amounts exceeding the permitted limit.
The bank's media office said in a statement received by the Iraqi News Agency (INA): "Citizens should be careful not to carry amounts exceeding the permitted limit," indicating that "they can use official methods to transfer large sums of money."
He added, "Citizens should avoid carrying cash to avoid legal accountability in the event that the permitted limits for bringing in and taking out money to and from Iraq are exceeded."
Taif Sami and the World Bank discuss supporting the economic and financial reform program
On Thursday, Minister of Finance, Ms. Taif Sami, received the World Bank’s Regional Director for the Middle East, Jean-Christophe Carret, and the Bank’s Special Representative in Iraq, Richard Abdelnour.
During the meeting, the World Bank's loans and grants, development project priorities, and ways of supporting the World Bank to enhance the financial and business sectors and improve the investment environment were followed up. The meeting emphasized the continuation of bilateral coordination to enhance sustainable development, in addition to discussing the bank's support for the government program regarding economic reform in Iraq.
Minister Sami pointed out the government's interest in strengthening partnership with international financial institutions, within the framework of accelerating the pace of financial and banking reforms in line with the Iraqi government's vision aimed at consolidating the foundations of the national economy, achieving economic balance, and correcting the course of financial policy in Iraq.
Central Bank of Iraq on 'unannounced' visit to America
An informed source revealed, on Thursday, that the Central Bank of Iraq is currently making an unannounced visit to the United States of America, to discuss developments in the Iraqi banking sector.
The source told Shafaq News Agency that a delegation from the Central Bank of Iraq, headed by the Governor of the Central Bank, Ali Al-Alaq, and a number of general managers, have been visiting the United States of America since the 26th of this month, to discuss developments in the banking sector and the restrictions on the use of the dollar imposed on a large number of private banks.
He pointed out that the Central Bank delegation discussed cancelling the platform at the beginning of next year, and relying on correspondent banks, which will increase the imposition of restrictions on Iraqi private banks, and completely eliminate competition in favor of Jordanian banks that have American correspondent banks.
The source noted that the Central Bank is close to signing a contract with Oliver Wyman, the consulting firm for the Iraqi Development Road, to conduct a study on reforming the Iraqi banking sector, in order for it to be approved by the Central Bank in the coming period, and to be considered a roadmap for reforming the private banking sector.
On the other hand, a number of economists were surprised by the lack of announcement of the visit of the Central Bank of Iraq to America, especially since it comes at a very important time.
Parliamentary Committee: We intend to amend 10 economic laws to facilitate trade and customs procedures
The Parliamentary Economic Committee announced today, Thursday, the existence of a project to amend about 10 economic laws, explaining that the goal is to enhance trade, facilitate customs and tax procedures, support the public and private sectors, and develop a real map for economic reform.
Committee member Yasser Al-Hussaini said, “There is a new project that includes amendments to approximately 10 economic laws,” indicating that “the proposed amendments came after holding intensive workshops with the Businessmen’s Union and the Iraqi Businessmen’s Council, in addition to representatives from various economic sectors.”
He explained that "these workshops aimed to absorb all visions and requirements from various economic sectors, including commercial and industrial sectors, in order to develop a comprehensive vision that achieves the required reform."
Al-Hussaini pointed out that "the proposed project includes amendments to 10 laws aimed at enhancing trade, facilitating customs and tax procedures, and supporting the public and private sectors."
The MP stressed that "the proposed percentage of amendments is still less than the desired level of comprehensive economic reform."
He explained that "the committee hopes to expand the scope of the amendments to include more economic laws, reflecting the true vision of economic reform, which is not limited to meeting the requirements of the government or the private sector, but aims to develop a comprehensive vision that achieves the interests of all."
He explained that "the law was read for the first time, and the second reading is scheduled to take place after the final vision matures through the ongoing workshops, after which the committee's report will be submitted and the law will be voted on."
He pointed out that "this approach aims to draw a real roadmap for the long-awaited economic reform, and to ensure its compatibility with all the aspirations of the concerned parties, whether at the government or private sector level."
Common phenomena in developing economies
In order to understand the reality of our Iraqi economy, we must look at the experiences of success and failure in economies close to or similar to the circumstances and challenges facing the Iraqi economy in order to benefit and overcome the challenges and causes.
There are commonalities in the causes of structural imbalance in the economies of developing countries in particular, including Iraq, of course, and the reason is that they are recipients of financial and economic crises exported by major countries that dominate the capabilities of the global economy, and exporting crises is either intentional or a result of conflicting interests between the major countries.
Perhaps the most beautiful description of the global economic situation I have read was in what an Arab international economist said, which he summarized in three words or synonyms: (confusing, thorny and pressing), which is a realistic and accurate description indeed.
He attributed the reason to the multiple errors in setting public policies and implementing the procedures required to implement these policies, or rather the important ones.
It is clearly evident in the results achieved as a result of the errors, with the emergence of large deviations between what was drawn up in public policies and what was implemented, and this gap is the criterion for evaluating the economic reality of any country.
The aforementioned economic expert believed that one of the most important reasons for this deviation is the issue of choosing the right man in the right place. At the same time, he acknowledged the great difficulties facing the economic planner, especially in finding an accurate mechanism for the optimal choice of economic work paths, as they conflict or intersect with the desire of those in charge of political decision-making for this choice. Herein lies the difficulty of finding solutions! This is the reality of the situation in developing countries.
This phenomenon, or the vision and analysis regarding it, is one of the common issues among countries that suffer from difficulty in finding solutions to economic problems due to the many structural distortions in their economies, according to the opinion of that international expert. There is much evidence that proves the validity of what that thinker and economic expert went to, specifically: (the difference between policy-making and implementation) in the experiences of several developing countries. What concerns us in this analysis is the need to pay attention to the importance of overcoming such challenges by all available means, as it is noted that there are persistent government efforts and serious practical steps in formulating economic policies that include realistic solutions, and this is what is included in the government program, and what is required is to address some cases represented by the weakness of implementing the policies drawn up in the best possible way by some, which may be the reason for the weakness of executive experience. What is required now is to work on finding a solution to the problem of appropriate selection in executive positions, while acknowledging the difficulty of having a ready mechanism for the solution. Despite this, the government realizes the importance of this option and must continue its well-known attempts to investigate administrative and technical competencies continuously.
The great interest that the government has provided in the services sector indicates the extent of its accuracy in formulating sound policies to address traffic congestion, for example, as well as in the field of addressing the housing crisis, and what is required is continuous follow-up of implementation in order to avoid falling into the mistakes noted according to the vision of the international expert, which he summarized as the problems of the separation between planning and implementation.
Billion Dollar Ambition.. Iraq Provides Facilities to Egyptian Companies and a Delegation from Them to Visit Baghdad Next Month
Egypt aims to increase the volume of trade exchange with Iraq by about 41% to one billion dollars during the coming year, compared to 707 million dollars annually, according to an Egyptian government official, at a time when major Egyptian companies expressed interest in investing in several sectors there in a meeting with Prime Minister Mohammed Shia al-Sudani.
The official's statements came hours after Prime Minister Mohammed Shia'a's visit to Egypt, where he met with a group of businessmen representing major Egyptian companies, who expressed their readiness to work in Iraq in various fields, especially the development road project, pharmaceutical industries, hospitals, infrastructure, and construction industries, according to a statement issued by the Prime Minister's Office.
Al-Sudani pointed out during the meeting that “the doors are open to Egyptian businessmen and companies, whose presence in Iraq is important to us, due to their successful experiences, and within a political direction to lead the two countries towards more cooperation and integration,” according to the statement.
The government official added that according to the latest statistics, the value of Egyptian exports to Iraq amounts to about $700 million annually, while the value of imports from Iraq does not exceed $7 million.
In contrast, an Egyptian delegation headed by Deputy Prime Minister and Minister of Industry and Transport Kamel El-Wazir intends to visit Iraq on September 9, with the aim of completing procedures for strategic partnerships between Egyptian and Iraqi companies, and with the Iraqi government, according to what was revealed by Alaa Ezz, Secretary-General of the Federation of Egyptian Chambers of Commerce.
Ezz added that the meeting with Al-Sudani, which included representatives of several companies including Hisham Talaat Moustafa, Hassan Allam, Orascom and El-Sewedy, witnessed the presentation of “the contribution of Egyptian companies to the infrastructure in the field of housing and construction in Iraq,” adding: “We asked the Prime Minister to deal with Iraq as a partnership and not as a labor market, meaning that Egyptian factories will manufacture production requirements in Iraq, either by acquiring their troubled factories or partnering with them to operate them.”
Pharmaceutical Partnership
Ezz explained that they also asked the Iraqi Council of Ministers to establish a partnership between the two countries in the field of medicines in stages, by establishing Egyptian factories to produce medicines, adding that Iraq imports 90% of its medicine needs, worth 3 billion dollars, revealing that the Iraqi side promised to issue government guarantees to Egyptian companies that will operate in Iraq.
This is not the first time that Egyptian companies have expressed a desire to work in Iraq. Last June, two Egyptian sources said that the Iraqi Ministry of Health was holding talks with Egyptian contracting companies to participate in the implementation and rehabilitation of 12 hospitals in the country with a total investment of $480 million.
Role of contracting companies
In addition to the pharmaceutical sector, Egyptian contracting companies are moving towards expanding their business abroad and seizing business in countries that are allocating billions in investments for reconstruction and development, especially Iraq and Libya.
Iraq needs $88.2 billion to implement reconstruction projects inside the country, which witnessed great destruction during the war against ISIS, according to previous statements by the Iraqi Ministry of Planning.
Tarek Shukry, head of the Real Estate Development Chamber at the Federation of Egyptian Industries, said that the Iraqi Prime Minister addressed his country’s need to build 2.5 million housing units, and implement other projects in the fields of infrastructure, water, roads and utilities.
Shoukry added that the Egyptian Minister of Investment and Industry will be a link between Iraq and Egyptian businessmen, especially with regard to the details of the required investment projects, land locations, offering systems, methods of granting them, financial transfers, granting visas, and other important matters for investors.
Shoukry said that the Iraqi Prime Minister promised to send all the details of the projects within two weeks.
Iraq spends half of its budget on imports, and these countries are at the forefront of suppliers
The Ministry of Planning revealed "the volume of Iraq's annual imports."
The Ministry's spokesman, Abdul Zahra Al-Hindawi, said in a statement to the official media, that: “Iraq imports many goods and merchandise from various countries of the world, including foodstuffs of various kinds and shapes, including electrical, construction, engineering, chemical, agricultural, medical, health supplies, and cars.”
He added, "The volume of annual imports reaches no less than 50 billion dollars."
He continued, “Iraq imports from the countries: Jordan, Turkey, Iran, Saudi Arabia, the Emirates, China, India, Japan, Brazil, the United States, and a number of European countries.
Ports and Financial Control discuss ending the file of final accounts for previous years
Today, Wednesday, the General Company for Ports of Iraq discussed with the Financial Supervision Bureau the completion of the file of the final accounts for previous years.
The Director General of Iraqi Ports, Farhan Mohsen Al-Fartousi, said in a statement received by (Al-Rabia): “According to the directives of the Minister of Transport, Razzaq Muhaibis Al-Saadawi, to provide transparent answers to the Audit Bureau, the ports discussed the draft report containing the Bureau’s observations on the 2021 accounts, and all difficulties were overcome and all inquiries were answered.”
For his part, the Assistant Director General for Administrative and Financial Affairs, Ahmed Khalaf Thajil, who attended the meeting with the Federal Financial Supervision Bureau team/Second Region Audit Department, Basra, stated that “Iraqi ports seek to complete the file of the final accounts for previous years and provide accurate answers to these observations.”
Parliamentary Finance: The path of development will achieve a shift in the course of trade exchange between Iraq and the world
The Parliamentary Finance Committee confirmed, on Wednesday, that the development path will achieve a qualitative shift in the course of trade exchange between Iraq and the world.
The media office of the head of the parliamentary finance committee stated in a statement, which was reviewed by "Al-Eqtisad News", that "the head of the parliamentary finance committee, Atwan Al-Atwani, received the Chargé d'Affaires of the German Embassy, Roland Vestbe, and his accompanying delegation; to discuss ways to enhance bilateral cooperation between the two friendly countries."
He added, "The meeting discussed political and security developments in the region and their impact on the Iraqi economy," indicating that "the two sides stressed the need to enhance bilateral cooperation between Baghdad and Berlin at all levels and in various fields, especially in developing the energy sector and financial and banking systems, in a way that achieves sustainable development."
Al-Atwani said - according to the statement: "Iraq looks forward to strengthening its relations with everyone on the basis of mutual respect, common interests, and non-interference in its internal affairs," adding that "the political and security stability that Iraq is currently witnessing has made it an attractive environment for investment."
He continued, "The entry of major international companies into Iraq is a clear indicator of stability and security, and we look forward to the participation of German companies in developing the energy sector and helping Iraq invest its wealth," noting that "the development path will achieve a qualitative shift in the course of trade exchange between Iraq and the world as it shortens time and provides security."
Al-Atwani pointed out that "many European countries have expressed their desire to join the development path, and Germany must have a presence in this strategic project, and the industrial and commercial projects scheduled to be established along the development path will drive the economy and provide thousands of job opportunities."
What are the challenges of selling Iraqi oil in “petro dinars” and will the dollar falter?
After 2003, Iraq was able to significantly increase its oil production level thanks to its openness to international companies specializing in energy, through the new contracting system called licensing rounds. Production increased from three million barrels per day in 2003 to more than 4.22 million barrels in the last quarter of 2023.
Iraq's oil and gas sector is the country's lifeblood, contributing more than 95% of GDP.
Caution Caution
In addition, warnings are escalating about the impact of the decline in oil on the general budget in Iraq and the extent of its impact on increasing the budget deficit, which is estimated at the time of approving the budget at about (47) billion dollars, especially since the budget depends primarily on oil prices, at a rate exceeding (95%) as its source.
And to Basra, where its crude oil is witnessing weekly losses of $5, or 2%, as a result of the global decline in oil prices, while observers see: “The interesting thing about the latest confusing matter is the acceleration of oil prices, which have witnessed some declines, but as long as oil prices are above (70) dollars, Iraq is safe and the planned deficit is (47) billion dollars, but they confirmed that if it falls below (70) dollars, even by one dollar, this will increase the deficit by a large percentage of up to $1.2 billion if the decline continues for one year, and this will put great pressure on the budget.
The data also indicates that prices will remain at $70 and will rise again to around $80 based on the OPEC and OPEC Plus action plan, and Iraq will benefit. As for Iraq’s current weekly losses, they are due to fluctuations or declines in Asian demand, especially in India and China.
Strategic expert Alaa Al-Azzawi said: “This measure will enhance the value of the local currency, which is suffering from confusion due to the fluctuation of the dollar exchange rate in the Iraqi markets.
Al-Azzawi told the “Iraq Observer” agency that the most important thing in this procedure is selling oil in dinars. “The petro-dinar will enable the Iraqi currency to enter the global markets, as Russia did before and sold its oil in local currency.”
The strategic expert pointed out that the most important thing is that the Iraqi dinar will enter a new phase in global trade relations, and the position of the dollar may weaken within Iraq.
Where is the series of losses going?
Basra Heavy and Medium crude recorded weekly losses, with global oil prices recording losses of more than 2%. Basra Heavy crude closed in its last session up $1.8 to reach $72.47.
It recorded weekly losses of $3.25, while Basra Medium crude closed in its last session with an increase of $1.8 to reach $75.47, and it also recorded weekly losses of $3.39, or the equivalent of 3.92%, while Brent crude recorded weekly losses of 1.2%, and West Texas Intermediate crude recorded weekly losses of 2.1%.
Both crudes hit their lowest levels since early January this week, after the U.S. government sharply cut its estimate of jobs added by employers in the country this year through next March.
For his part, Al-Sudani’s financial advisor, Mazhar Muhammad Salih, said: “Any deviation between oil prices (petrodollars) and the exchange rate (petrodinars) according to international market data will be considered a cost that requires compensation by paying fewer dinars or collecting a higher dinar in the opposite case,” indicating that “international reserve currencies are foreign currencies held by central banks and global financial institutions as part of their monetary reserves.”
These currencies are used in international transactions and debt settlement between countries, and are a standard for international payments and facilitating global trade.”
“Russia suffered a lot when it priced its exported oil in rubles (petrorubles), and the ruble is a non-reserve currency, and committed to a value for the ruble that was initially denominated in gold to ensure the stability of oil revenues. Here, the petroruble underwent two asset cycles at the same time (which complicated the scene of selling oil in local currency and stabilizing the value of the petroruble),” Saleh said.
According to Saleh, international market data indicate that “the first cycle: is the result of the impact of what is called the gold asset cycle and its impact on the value of the (petroruble) or the local currency denominated in exported oil.
The second, and the talk is in favor of: it is the oil assets cycle, and its effect on the value of a barrel of oil outside the global price and the reflection of that on oil revenues priced in that currency, and that “the two cycles are asset cycles that are linked and contradict each other at the same time on the value (of the currency priced in the exported oil, such as the petroruble), which made pricing Russian oil in rubles as a local currency and according to the data of the global oil market a very complex issue.”
He pointed out that “the principle of using the dinar as a local currency in international oil exchanges (petrodinar) is not without many challenges, which is why those potential challenges must be carefully considered, especially the issue of the flexibility or stability of the value of the (petrodinar) itself to change and fluctuation, especially since we in the oil market are not price makers in it, but rather price takers.”
He noted that “the global oil market will control the fluctuation of the local currency (petrodinar), in addition to the importance of international recognition of it, and the financial infrastructure necessary to support such operations from (petrodinar).
“In other words, the strategy of basing the value of the currency on oil exports directly may make the value of the local currency vulnerable to fluctuations in the global market,” he continued. “The proposal to sell oil in dinars as a local currency must take into account an important theory in global trade called the Law of One Price, which is an economic concept that assumes that the same commodity should be sold at the same prices in all markets when the price is expressed in the same currency.”
Explaining: “This is on condition that there are no transportation costs or trade barriers such as customs tariffs and others, as the single price theory here is the basis for many economic and commercial models and the theory is based on the assumption that markets operate efficiently, according to the official agency.”
A new collapse
and oil prices fell by about 2 percent today, due to fears of the impact of the slowdown in economic growth in the United States and China on energy demand, especially after prices rose by more than 7 percent during the previous three days.
Brent crude futures fell 1.6 percent, or $1.31, to $80.12 a barrel, while U.S. West Texas Intermediate crude fell 1.7 percent, or $1.30, to $76.12.
Prices have risen sharply in the past few days as analysts point to a potential shutdown of Libya's Nagat fields, which could limit the OPEC member's output of around 1.2 million barrels per day.
Analysts pointed to tensions in the Middle East following a large-scale exchange of fire between Israel and Iran-allied Hezbollah in Lebanon in recent days, according to Reuters.
Crude oil prices have recently been affected by growing expectations that the Federal Reserve will cut interest rates next month, which could boost economic growth and thus demand for oil.
U.S. data is expected to show that energy companies last week pulled crude oil from inventories for the eighth week out of nine.
Analysts expected US energy companies to withdraw about three million barrels of crude from inventories during the week ending August 23.
The American Petroleum Institute is scheduled to release weekly U.S. oil inventory data today, as is the U.S. Energy Information Administration.
Iranian Ambassador: President Masoud Pezeshkian's visit to Baghdad will take place between September 10-20
Iranian Ambassador to Iraq Mohammad Kazem Al-Sadiq announced that the visit of Iranian President Masoud Pezeshkian to Baghdad will take place between September 10-20.
He said in a press statement that a high-level delegation will accompany President Pezeshkian in response to the invitation of the Sudanese Prime Minister, and a number of memoranda of understanding that were scheduled to be signed by the presidents of the two countries during the visit of the late President Ibrahim Raisi will be signed.
He explained that some memoranda need to be referred by the relevant ministers in the government and will be signed by the ministers of the two countries at a later time due to the start of the formation of the new Iranian government.
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